Butter wouldn't melt in her mouth

OK, so I'll fess up right now, I'm a swearer, as hard as I try not to be for some situations I do still swear. For example I trip over the coffee table and fall flat, for me it's an automatic swear word. Muddy Hubby and I do however try very very hard not to swear in front of the Muddy Kids. So it came as a very big shock the other day when Muddy Girl 1 came out, not only with a great big swear word beginning with F, but accompanied it by calling her sister a very not nice name which I will not repeat, needless to say it is not a name she has ever heard uttered in this household. So......my question is what do you do? How do you deal with something like this. I was prepared to cope with a swear word, but not the awful name.

I decided to deal with each part separately, mainly because I figure the swear word issue will come up again  and again down the track and I want to be consistent, but the awful name I never want to hear uttered past her lips again. My gut feeling (and I'm pretty sure it's right) is that she has absolutely no idea what the awful name means, she merely associates it with name calling such as 'Sooky Baby' which she is often calling her Muddy Sisters, and which we are forever reminding her not to call them names.

Muddy Girls 1 and 2 when they're happy to play together

So we sat down on the bed and we talked about how we don't call people names and that we especially don't call people by this name and that she is NEVER EVER to say it again (yes it is that bad). Then I went the very hard line on the F word, yes she doesn't know what it means, but if she says it again it means that her mouth will have to be washed out with soap, yes I know I'm a mean Mum. I'm really hoping I never have to do it, but given I made the commitment I'm going to have some soap ready, as I've learnt follow through and consistency is the most important part of discipline. It was automatic instinct to warn her about washing her mouth out with soap. I'm kind of wishing I hadn't said it, but it's out there now so we'll see what happens.

For the life of me I could not get out of her where she heard it, I pushed and probed and gently questioned and reassured. EVENTUALLY she admitted she heard it at Daycare, which I had kind of suspected, she tells me no-one said it to her, but that she heard someone say it to somebody else, but Muddy Girl 1 would not cough up a name. Now I know it's my issue to deal with and I expected that at some point I would have to deal with it, but I still felt I needed to make the Daycare Director aware of what she'd said, mainly so the teachers keep their ears open in case it happens again. The Director was very understanding, was quick to reassure me she'd be onto it if she heard it etc etc.

The real thing that scares me though is that the other child that has said this awful name, accompanied with a swear word, has obviously either had this said to them or heard their siblings or parents say this, and that is very very sad, that there are people saying such awful things in the presence of children or to children. I can do whatever I can to try and raise my children as I feel is best and to the best of Muddy Hubby's and my abilities, but what about kids that don't have the same love and nurturing, who looks out for them?