lists and list item matches (ghost wodgame)

[Baba]

Hi

query level: beginner

as part of a learning exercise i have written code that:

a) asks for a single letter input (assumption: only 1 letter wil be
entered)
b) adds that letter to list1 and then goes through list2 and checks:

    1) if any item in list2 starts with list1 > if False: break
    2) if list1 == any item in list2 > if True: break

c) start again until 2) is True

wordlist = ['hello', 'bye']
handlist = []
letter = raw_input('enter letter: ')
handlist.append(letter)
hand = "".join(handlist)
for item in wordlist:
    if item.startswith(hand):
        while item.startswith(hand):
            if hand not in wordlist:
                letter = raw_input('enter letter: ')
                handlist.append(letter)
                hand = "".join(handlist)
            else: break
        else: break
print 'you loose'

this code works but can it be optimised? i have the feeling that my
nesting of IF, WHILE and FOR statements is overkill?

inspired by part IV of
http://ocw.mit.edu/courses/electrical-engineering-and-computer-science/6-00-introduction-to-computer-science-and-programming-fall-2008/assignments/pset5.pdf

thanks
Baba