Washington ? Democratic presidential hopeful John Kerry has decided to opt out of the post-Watergate public financing system and will spend his own money on the race, taking out a personal loan to help fund his struggling White House bid.

Kerry becomes the second Democratic presidential candidate to abandon the system for the primaries, joining rival and more prolific fund-raiser Howard Dean. The decision allows the two to bypass state-by-state limits in such critical early voting states as Iowa and New Hampshire, the latter a must-win for the two New Englanders.

Unlike Dean, Kerry has promised to limit his overall primary spending to the $45 million cap the public financing program imposes — if he can raise that much.

“He (Dean) changed the rules of this race and anybody with a real shot at the nomination is going to have to play by those rules,” Kerry said Friday in Iowa.

Kerry’s move marks the first time in Democratic history that two contenders for the nomination have abandoned the system. It also is the first time candidates in both major parties are skipping public financing for the primaries.

“As you all know, this has been a difficult week in our campaign, but I’ve been in tougher spots than this before and I’ve fought back and won,” said Kerry, a decorated Vietnam War veteran. “That fight begins today with a decision I’m making to give up federal matching funds in this campaign.”

The Massachusetts senator fired his campaign manager on Sunday, then lost his chief spokesman and deputy finance director, who quit within days. Kerry compounded the problem on Thursday, telling The Associated Press his campaign would be “better off” without them. He later called the three former aides to apologize.

There was some confusion again Friday as the Kerry campaign said the candidate would take out a personal loan, but Kerry said in Iowa that he had not made a decision. In a telephone interview with the AP, Kerry sought to clarify, saying he would use his personal money, in the millions of dollars, and would do so through a loan.

Kerry’s decision to skip the $18.7 million in public money comes despite a slowdown in his fund raising after a promising start, and the acknowledgment by his campaign that he cannot tap wife Teresa Heinz Kerry’s multimillion-dollar Heinz food fortune for the race.

Democratic presidential hopeful Sen. John Kerry of Massachusetts, center, talks with workers while touring a Youthbuild construction site in Des Moines, Iowa. Kerry announced Friday that he will not accept public financing for his campaign.