Cut it down, root it out or try to save it?

I have a tree in my front yard that is approximately 10 years old--some sort of elm. The bark looks sooty and is peeling away from the trunk, the leaves on the tips of the branches are curled up and the tree is infested with ants that travel in and out of a number of knot holes that seem to cover the tree. Is it worth saving or should I cut it down and replace it?
Submitted by BHGPhotoContest

If the trunk damage extends half way or more around the trunk, you might as well cut down the tree. If it extends less than 1/4 of the way around the trunk, there's a good chance that the tree might recover. The ants crawling into the wood, indicates that there probably is decay in the main trunk, and that these are carpenter ants feeding in the decayed area. I suspect that the damage is fairly widespread.

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