I think you can always substitute dumbbells for a barbell. But, not the other way around. Dumbbells give the most flexibility, however if you don't have heavier dumbells than you might not be using heavy enough weights. When you start getting up to 25 pounders they are very expensive and it's probably cheaper at that point to get a barbell set. But, you can work your way up to it. Stability balls are pretty reasonable, they're only about $10 at walmart, and probably worth getting. If you can't get one then just try to make do with your surroundings, your bed or you can use the step as a workout bench.
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