I like to use a three-window setup when modeling:

When you start Blender it has only one window with a camera, light, and plane. Select all three objects (AKEY) and then delete them (XKEY).

To split the window into two views, move your cursor to the top edge of the screen until it turns into a double-arrow and hit your MMB. Click on the "Split Area" button on the menu that pops up. This will cut your window in half.

Since the split always cuts the current view, move your mouse to the right-side window and then move it back to the left border and cut it in half again. This will give you the three-window layout that I use.

Move your mouse to the large window on the left and press NUMPAD 1. This is now your Front View window. Next move your mouse to the top window on the right side and press NUMPAD 7 Now you have a Top View. Finally, change the last window to a Side View with NUMPAD 3.

Let's add a circle to the Top View window by pressing SPACEBAR and going to Add>Mesh>Circle:

Blender will ask you for the number of Vertices you want. You can click on the right or left side arrows on the button or hold down your LMB and drag it left or right to rapidly scroll through the numbers.

We would like 8 vertices for our circle.

We'll need to make the circle oblong. This will be the shape of our handle.

When we create the circle it begins life with all vertices selected and that's how we need it to scale the entire object. Click (SKEY) to begin the scale mode and move your mouse either closer to or away from to make it larger or smaller. What's that? It just makes it bigger or smaller, not oblong? While in Scale mode, click and hold MMB. This scales the object along a specific axis. You can click again on MMB to toggle this effect on or off.

Now scale (SKEY+MMB) the circle to make a nice oblong shape.

Move your cursor to the Front View. Pan (SHIFT+MMB) the Front View to place our circle near the top of the view.

Now, with all vertices still selected, we will Extrude (EKEY) them all straight down until we get a nice sized handle.

As with the scaling, once you enter Extrude mode, just click through the axis options with the MMB until you get the one that makes it go straight along the Z-axis. This ensures we have a straight handle.

To make the pommel we are going to Extrude and Scale it two more times.

The bottom vertices will still be all selected, so we don't have to worry about selecting them.

Extrude (EKEY) it straight down a little bit, and don't forget to use the MMB. Now Scale (SKEY) it, but don't constrain it with the MMB. We want to Scale it all the way around. Extrude (EKEY) it again, a little farther this time, using MMB. Scale (SKEY) it once more, but this time make it smaller than the handle.

You should have something like this:

Time to Rotate the Front View using the MMB. We would like to see the opening at the bottom of the sword:

We can't have that opening there, can we? Once again, the direction in which we Extruded our model leaves us with the correct vertices selected, the very bottom ones lining the opening. We will use the AutoFace (SHIFT+FKEY) tool to fill this in:

That's better. Now let's deselect (AKEY) all vertices and switch to Front View (NUMPAD 1). Pan (SHIFT+MMB) the view to make the top of our handle in the center of the screen. You may Zoom in or out by scrolling the MMB up or down.

Now we want to Select the top row of vertices. This will be easier if we use the (BKEY) which allows us to drag a box around a group of vertices. So drag a box around the top row and Extrude (EKEY) it up just a little bit:

Page 3