How do I setup 'friendly urls'?

Hi there! I am currently using nginx mainline 1.5.9 and was wondering how I would setup friendly urls.

https://hostup.org/billing/clientarea.php should be https://hostup.org/billing/clientarea. But when making nginx redirect it without the .php I get a Page not found error. How can I make the clientarea.php be displayed at clientarea? The same thing goes for .html.

Thank you! :)