It could be an ingrown hair, there are actually a number of things that it could be. I can tell you for sure that you should not squeeze it if you can help it. Whatever it is, it is an infection of some kind. Squeezing it can spread that infection and you may soon have more than one of these painful lumps. There are sometimes, and perhaps they have already happened, when a lump such as yours will come to a head, then you can squeeze it if you want, but make sure you clean the area and especially your hands right away.
Your doctor will be able to tell you exactly what it is, and if it lasts for longer than a few days you should go see your doctor. If it is a boil it is possible that it is the dreaded bacteria Staphylococcus aureus, which is a bacteria that lives on many humans. Normally it is harmless but when it gets inside the skin it can cause boils and if it gets too bad it can cause a fever. Your doctor will be able to give you either some anti-biotic ointment or pills. That should help clear up your lump pretty quickly.
Keep in mind that if it is a staff infection it could still be an ingrown hair, and if it is another kind of infection anti-biotics will still help.
Check out this site for more on staff infections.
http://www.kidshealth.org/parent/infections/bacterial_viral/staphylococcus.html
