Sounds like you are doing a really good job training and managing your dog! Keep it up! Things will likely settle down in a bit.Okay lets get some things straight:
1. Our dog is not left outdoors alone, ever. My husband and I are outside with her whenever she is out because we have been actively working on training her and her reactivity. A child ending up in our yard alone with the dog, would never happen.
2. When our dog begins to bark, she is brought indoors right away. We do not let her bark her head off for an extended period of time because we are quite aware that noisy dogs are annoying for neighbors and I respect that.
3. I understand kids are noisy and I would never expect them to be silent in their own yard.
4. Working with a reactive dog is different then a "regular" dog.
5. Of course my dog barking the neighbors is a "problem"...that is why I came on here to seek advice.
6. I agree socialization is key here. Our dog came to us as a rescue at 1 years old and was clearly not socialized in her past life. This is a work in progress. I am also careful not to put through her into situations that would spike her reactivity (which is fear based). Meeting the neighbors may be step taken with careful consideration.
7. New neighbors seemed very understanding of dog barking and where I am coming from- they have not expressed any frustration towards me. I have heard them tell their son to stop barking/yelling at my dog countless times...the child still does not stop.
Training wise you might want to go just straight forward Counter conditioning since you're always outside with your dog. If unfamiliar, more or less just tossing some food each time you hear the kid. Generally what happens is automatic attention when the dog makes the connection that something tasty follows the noise. Later You can build on that attention once the association is established. Perhaps by asking for and rewarding incompatible behaviors.
Another nice option (similar but involves a marker such as a clicker) is the Listen to That game. It's a play on the look at that game and for auditory triggers. Sara Owings has a pretty nice tutorial on youtube.
Or if able (sounds like maybe you are) and your dog isn't completely loosing it, you could just interrupt and redirect the barking, though it tends not to eliminate all barking. That's the route I tend to go most of the time myself because I like my dogs to alert bark. They bark and I check it out. If it's no big deal (neighbors out, mailman, deer, etc.) I normally just thank them, ask them then follow me and then go do something different.
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