My grandpa taught me how to do this along time ago and I figured because this is the site that is the depository for all how toing knowledge why not add my own weird trick.
Step 1: Locating the Strip
Take American paper currency more than the one (one dollar bills do not contain the magnetic strip) and hold it up to a bright light. I recommend doing this with five because this may make it so that you can't use the bill in a vending machine or at least it will think its a one. I also recommend that you do this with an old bill because it makes extraction easier. When you look through the five you should see a strip of something that has the words USA FIVE written in small black print on it.
Disclaimer: This may be illegal. This is only for informational purposes.
Step 2: Preparing for Extraction
Now that you know where the strip is you have to loosen it within the two layers. I do this by folding the bill along the strip. Then hold the fold in between your thumb and pointer finder and role the fold back and forth. If you do this with a new bill you should see a kind of pocket in the shape of the strip forming. You want to do this thoroughly along the whole strip to make sure its completely loose.
The below picture is a side view of the five.