Out of pocket medical expenditures made by families for physician services, dental visits, medications, hospitalizations and insurance premiums are examined in a southern rural community using household survey interview data. White families paid an average out of pocket amount for total medical services of $709 as compared with $383 for black families over a 12-month period, 1974-75. Correlates of expenditure differences between blacks and whites are explored with respect to family characteristics (race, education of household head, family income, family size and family composition), illness levels (number of family members with perceived fair or poor health status and number of family members reporting chronic conditions), and use of services (number of doctor visits and type of usual source of care). We find that whites consistently report greater expenditures than blacks, regardless of the variables controlled for. We consider that expenditure differences are in part due to a mix of three factors: variations in the cost of doctor visits to whites and blacks; a lower level of use of services by blacks; and the differential availability and use of third party payors.