I'd try to spin it as "ignorant" rather than "bad" -- that some people grew up not knowing any better, but that you're glad you do know better and that your children know better also.

Remind your DH's relatives that "Little pitchers have big ears" and there are words you'd prefer your little pitcher doesn't hear.
When my DD came out with a swear word she had heard from a passing truck driver, I told her "That's a grown up word. You can't use that word until you're grown up," and it worked! You could try "That's not a word we use in our house/family". Why? "It might hurt someone else's feelings and we don't do that."
And reassure your DD that when people do bad things it doesn't make them a bad person, just someone who was trying hard to be good and didn't quite make it on occasion. Otherwise she is going to think that if SHE does something "bad", then SHE is by definition a "bad person".

It's very easy for me to say, but I think the "right" thing to do is correct the offending person right then, right there.

You can do it pleasantly, just say, "oh, no, we do not use that word; it's hurtful & rude."

& don't dwell on it.

It's always more effective for your kids to see you facing the problem than to see you *allow* it from the offending person & then "explain" it to them (the kids).

& if you mention that it might hurt the people next door, then it sounds like the people next door are the ones with the problem & the kids focus on the ways in which the people next door are different.

I once told my sister-in-law (an ex SIL thank goodness) that I hated to hear her use a certain word, that I hated to think my nephew would repeat it & people would think he was an ignorant redneck.

(No, she wasn't my very favorite SIL, & I suspect I might not have been hers.)

lol, sylvia - maybe I will try that. I'm pretty sure the reaction will be to use very PC words, in a very patronizing voice, but I would actually prefer that over sitting there doing nothing.

I don't even mind so much that the kids hear those words - they probably already have anyway. I just don't want them to hear people they look up to using them.

I think its appropriate to say "we don't use those words in our house".

If the subject is inappropriate "lets change the subject".

What does your husband think about all this ?

You have your standards, and when they are in your house I guess you can try to stick to them.

Bit difficult outside the home.

But its a good lesson for your children in how words can upset people.

My DH's friends have a bad habit of saying a few choice words that I don't like anyone of any race to say around me. I deal with it when we are at their homes... because it is their home and for the most part they are very good people. But, in my home...I always say something. Usually, I keep it light and just come on can't we be more creative with our words people. or if it keeps on going (which it has once or twice) I will firmly let them know.. I don't like that word and I don't like my family hearing that word... don't use it in my home. There is no reason not to stand up for what you feel is right and I think it is a good lesson for your children.... You can stand up even to those you love for something that is right and still be curteous and have a good relationship with them. DH supports me on it which is helpful. Nowadays I can usually give him a look when they start and once I leave the room for a drink or whatever he will say something like "man, lay off ... she doesnt like that"

I caught my boys saying a few choice words that were not exactly kind about homosexuals... I don't think they fully understood the meaning but I stopped it dead in their tracks... saying I don't care where you heard it you will not use words that hurt others in my home.

The ex and his family were much like your in-laws. I became very concerned when my autistic pre-school son let loose with a string of expletives and racist remarks while watching a movie at home. Luckily, his teacher and I had great communication and was receptive to my suggestion to include a little diversity education in daily lesson plans.

A few weeks later, we were out shopping. We came upon a little (very dark) black boy and his very white father. To my absolute horror, my DS looked quizzingly from son to father, turned to me and said loudly, "Mama, he's BLACK!" My heart was in my throat until he continued, "and black is my favorite color!"

Today as a young man, he has many friends of different ethnic backgrounds, while his father and family hate anyone who is the least bit different. I feel sorry for them.

I'm glad you posted, dirt_y, because I worry that my kids will pick up on my in-laws' racist attitudes. I am glad for the families of different ethnic backgrounds in our neighborhood, but there are just a couple, and in general there is not a lot of diversity in our suburb.

But we live close to a large city, where the workforce is diverse, and I want the kids to feel comfortable working with anyone. So I'm glad to hear your story!

Why do kids always talk so loud????

In our area (county) at the time there were probably less than a handful of families of other races. There are a lot more now. Actually, one of DS's best friends was a black boy adopted along with his 3 sisters by a white family. DS now works with him at the local hardware. I think DS's acceptance of the boy helped others in school accept him better, too. DS is four years older.